PracticeAuditDeloitte partner barred as firm pays $1m

Deloitte partner barred as firm pays $1m

Returns policy of pharmaceutical company was not properly checked, says PCAOB

A Deloitte partner has been barred from the profession for two years, and the
firm given a $1m (£480,000) penalty over its audit of Ligand Pharmaceuticals in
2003.

The
Public Company Accounting Oversight Board yesterday issued orders
against
the firm and the former audit partner, James L. Fazio, for breach of the board’s
interim auditing standards.

The audit had failed to properly assess the company’s accounting for product
returns, the body said.

‘Mr. Fazio failed to perform appropriate and adequate audit procedures
related to Ligand’s reported revenue from sales of products for which a right of
return existed and failed to supervise others adequately to ensure the
performance of such procedures.,’ the PCAOB said in a statement.

‘In evaluating the reasonableness of Ligand’s estimates of future returns,
Mr. Fazio neither performed nor ensured the performance of procedures that
adequately took into account the extent to which Ligand had consistently and
substantially underestimated its product returns,’ it added.

Fazio cannot become an ‘associated person’ of a registered PCAOB accounting
firm for two years, when he may reapply to the board, it said.

The firm, without admitting or denying the board’s finding, consented to a
$1m penalty. It has also implemented changes to its practices and will carry out
further improvements to the way it documents quality control, the board said.

Further Reading:

Read
the PCAOB’s statement

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